The government of Afghanistan has denounced a US airstrike on an Afghan village that took the lives of seven children and one woman on Wednesday morning.

Afghan President Hamid Karzai linked the incident to the continuing tensions with Washington over his postponement of signing a bilateral security agreement (BSA) that would allow some 12,000 US troops to remain in the country indefinitely after the formal deadline for withdrawing all foreign occupation forces at the end of this year.

According to both the Karzai government and the governor of Parwan province, where the massacre took place, the incident began when US special operations troops attempted to enter a home in the Ghorband district, about 25 miles north of the capital of Kabul.

NATO’s International Security Assistance Force released a statement on the raid saying that the bombing was ordered after US and Afghan government forces came under attack and “required defensive air support to suppress the enemy fire.”

The statement added that ISAF “regrets that civilians were killed” in the attack, while claiming that the operation had been “Afghan-led.” In addition to the civilians, ISAF reported one US Special Forces soldier killed, as well as 10 “insurgents.”

According to the US military, the operation targeted two Taliban leaders identified as Qari Nzar Gul and Moorullah, who were believed to be in the district. The area has in the recent period become increasingly contested by armed opposition forces and apparently a base of operations for attacks on the US-controlled Bagram Air Base.

Denouncing the killings, a statement from Karzai stressed that “The Afghan government has been asking for a complete end to operations in Afghan villages for years, but American forces acting against all mutual agreements and guarantees have once again bombarded a residential area and killed civilians.”

A spokesman for the Afghan president, Aimal Faizi, added, “Of course, this is exactly about one of our conditions about the signing” of the security agreement. “But it seems like it is not understood. How many more innocent Afghans have to die so it gets the attention of US officials?”

Karzai has declared an end to both night raids against Afghan villages and US airstrikes on civilian populations as pre-conditions for signing a long-term agreement for the continued presence of US troops. Last November, after civilians were killed in a pair of drone strikes, the Afghan president threatened to cancel the agreement entirely if attacks on civilians did not cease.

In his statement responding to Wednesday’s mass killing, Karzai directly accused President Barack Obama of reneging on a promise made in a letter sent after the November incidents, claiming that US forces would target Afghan homes only under “extraordinary circumstances.”

“But the American troops, contrary to all mutual agreements and given assurances in President Obama’s letter, once again resorted to bombing a residential area and killing civilians,” Karzai wrote.

The Obama administration has demanded that the Afghan president sign the agreement soon, claiming that if he delays, it will have no choice but to prepare for the complete withdrawal of US military forces and, it has indicated, a cut-off of military aid to Karzai’s regime.

At a meeting of the International Contact Group on Afghanistan in New Delhi on Thursday, Laurel Miller, deputy US representative for Afghanistan and Pakistan, stressed that there was a “a practical linkage” between Afghanistan signing the BSA and aid for Afghanistan.

“Unless we are able to have a troop presence in Afghanistan after 2014, we will not be able, as a practical matter, to provide certain security assistance that we have indicated we hope to provide to Afghanistan because it takes manpower to spend that money.” She added that “a deterioration in the security situation” would also make it “very difficult to deliver” non-military aid.

Last week, the Washington Post cited a secret cable sent by the US ambassador to Afghanistan, James Cunningham, warning that Karzai would probably not sign any agreement until after presidential elections set for April.

US officials have repeatedly denied that they want to go through with the so-called “zero option,” and US intelligence agencies have predicted a rapid collapse of the regime in Kabul if all US forces are withdrawn. Washington also wants to keep control of a number of bases scattered across Afghanistan, which provide it the means of projecting military force toward neighboring China, Iran and the oil-rich Caspian Basin.

As tensions continue to mount over agreement to keep US troops in the country until 2024 and beyond, a series of reports have underscored the dire conditions of Afghanistan after more than a dozen years of US occupation, on which Washington has spent hundreds of billions of dollars.

The World Bank issued a report Wednesday that Afghanistan’s economic growth rate had plummeted from 14.4 percent to just 3.1 percent over the course of 2013. The report suggested that the economic decline was being driven in part by the withdrawal of substantial numbers of foreign military forces, the wrapping up of various reconstruction projects and the bursting of a temporary “aid bubble.”

A year-end report by Thomas Ruttig, the co-director the Afghanistan Analysts Network, pointed out that 2013 had been the most violent year since 2001, when the US launched its invasion, with civilian casualties rising by 10 percent compared to the previous year.

Ruttig points out that, while apologists for the US-led occupation invariably cite the figure of “three million” Afghan girls attending school as one of its supposed achievements, the reality is that 82 percent of girls (and 68 percent of all pupils) leave school before the sixth grade. Meanwhile the number of teachers has decreased, falling from one for every 44 students in 2011 to one for every 64 in 2013.

Afghanistan remains number 96 among 105 “developing” countries, according to a UN index, with 36 percent of its population unable to “meet their basic requirements such as access to food, clean water, clothing and shelter.” Fully 60 per cent of children are malnourished. Only 27 per cent of the population has access to safe drinking water, and just five per cent to sanitation and hygiene facilities.

Meanwhile, opium production in the country is soaring, despite some $7 billion spent by the US since 2002 ostensibly to eradicate it, according to testimony given to a US Senate panel Wednesday by Special Inspector General for Afghanistan Reconstruction John Sopko.

“The situation in Afghanistan is dire with little prospect for improvement in 2014 or beyond,” Sopko said in a written statement. “Afghan farmers are growing more opium poppies today than at any time in their modern history.”

The area under poppy cultivation, about 516,000 acres, has grown by 36 percent in just the last year, while the value of opium and its heroin and morphine derivatives coming out of Afghanistan has risen to nearly $3 billion—a 50 percent increase since 2012—according to a UN estimate.